On April 17, 2025, the New York Court of Appeals ruled in Matter of Dynamic Logic, Inc. v. Tax Appeals Tribunal of the State of New York,[1] that Dynamic Logic Inc., an advertising research firm, was liable for $2.3 million in sales and use tax which it had failed to collect with respect to reports delivered to its clients between 2011 and 2014. 

Dynamic Logic’s AdIndex service evaluates the effectiveness of advertising campaigns by surveying consumers exposed to specific ads and comparing their responses to a control group. These surveys consist primarily of standardized questions, with a few tailored to specific campaigns. The collected data is compared against broader market data stored in Dynamic Logic’s MarketNorms database, which aggregates anonymized results from previous AdIndex studies.  Dynamic Logic then generates a final report for the client, which includes the survey data collected, analytical narratives, and client-specific insights and recommendations, and the report is then added to the MarketNorms database.

Under New York State Tax Law Section 1105(c)(1),[2] sales tax is imposed on receipts from the sale of information services, unless that information is “personal or individual in nature” and “is not or may not be substantially incorporated in reports furnished to other persons.”  In the Dynamic Logic case, the court found that although Dynamic Logic’s reports included client-specific analysis, the underlying data came from a larger shared database — Dynamic Logic’s MarketNorms — which was compiled using information from multiple clients and reused in reports to others. According to the court, the inclusion of substantially similar data in reports for multiple clients meant that the reports were not truly customized and thus constituted a taxable information service. 

This ruling underscores New York’s narrow interpretation of the exemption in Section 1105(c)(1). Even when services include personalized recommendations, if the core function involves collecting and analyzing data that is reused across clients, the services may be subject to sales tax.  Businesses that rely on benchmarking data, syndicated datasets, or standardized metrics across clients may be particularly vulnerable to tax exposure as a result of the Dynamic Logic decision.

[1] A copy of the opinion can be accessed here: In re Dynamic Logic Inc., N.Y., No. 2024-00080, 4/17/25

[2] N.Y. Tax Law § 1105(c)(1) (taxable information services include “…[t]he furnishing of information by printed, mimeographed or multigraphed matter or by duplicating written or printed matter in any other manner, including the services of collecting, compiling or analyzing information of any kind or nature and furnishing reports thereof to other persons, but excluding the furnishing of information which is personal or individual in nature and which is not or may not be substantially incorporated in reports furnished to other persons.”).